AUD Weekly Forecast (July 1 – 5)

The RBA is up this week! What can you expect from this week’s Aussie-related events?

RBA’s statement (Jul 2, 5:30 am GMT)

As expected, the Reserve Bank of Australia (RBA) cut its interest rates by 25 basis points to 1.25% last month. That’s the first cut since August 2016, yo!

The central bank shared that it was done to “support employment growth” and for inflation to be “consistent with the medium-term target.”

The move was already widely anticipated after a series of weak domestic data, so the decision didn’t cause a lot of pain for the Aussie. Heck, even the surprisingly dovish presser by RBA head Lowe failed to get bearish momentum!

This week analysts expect ANOTHER 25 basis-point rate cut from the RBA. And why not?

For one thing, Lowe had already shared that “It is not unrealistic to expect a further [interest rate] reduction.” He’s also not a fan of a measly rate cut when “everyone is easing,” Last but not the least, June’s meeting minutes revealed that it’s “more likely than not that a further easing in monetary policy would be appropriate.”

Before you short the Aussie like there’s no tomorrow, though, you should also note that only 70% of market geeks are expecting a rate cut this month. If the RBA is in a waiting mood, then it’s also possible for it to wait until its August estimates to deliver its next rate cut.

Trade balance (Jul 3, 2:30 am GMT)

Australia’s trade surplus narrowed down from 4.89B AUD to 4.87B AUD in April, marking the smallest surplus since January.

Turned out, exports had only grown by 2.0% while imports edged 3.0% higher for the month. Luckily for the bulls, traders were more interested in pricing in optimism over the trend of central banks getting ready to make stimulus rain on their economies.

If you’re trading the event, you should know that analysts see the surplus rising to 5.25B AUD in May. Watch the report for any remarkable trends that might hint at Australia’s future trading numbers!

China’s trade prospects

The NFP week is busier this time around with China’s official AND Caixin’s manufacturing and non-manufacturing indices for the month of June.

If you recall, China’s indices are flirting with the 50.0 mark that draws the line between expansion and contraction. Keep your eyes open for any significant drops and pops, as well as trends and patterns that might hint at China’s future manufacturing and non-manufacturing activities.

As if there’s not enough action in there, you should also watch how markets react to the U.S. and China resuming their trade negotiations. See, both camps have agreed not to impose further tariffs after a meeting in Japan last weekend.

How long will the optimism last? More importantly, how fast can representatives work on a trade deal that would finally lay a chunk of global trade concerns to rest?

Missed last week’s price action? Read AUD’s price recap for June 24 – 28!